Wanda and Howard Background Wanda and Howard have been married for 50 years and are both in good health. Wanda and Howard live in a community property state. They have the following children and grandchildren: Children Grandchildren Rosa Age 45 3 children Amy Age 35 4 children Gina Age 32 No children Sophia Deceased 1 child Rosa, an estate planning attorney, is married, healthy, and happy. Wanda and Howard adore Rosas husband, Doug, and their three children. Amy, a high net worth investment consultant, was recently divorced and her ex-husband, Brian, has custody of their four children. Wanda and Howard, never quite cared for Brian, as he always seemed to be quite snooty. Since the divorce, the relationship between Wanda and Brian has been very strained. Since her divorce, Amy has had somewhat of a mid-life crisis. She recently rented a penthouse apartment and bought a new Jaguar. Amy has also been dating Adrian, a 21-year-old swimsuit model. While Wanda and Howard are confident that this is only a passing phase, they are concerned about giving any gifts to Amy or her children outright. Gina is an elementary school teacher who has never been married and has no children. Gina. Gina has aspirations of going to graduate school to become a diagnostician but is concerned about taking on debt to pursue additional education. Wanda and Howard are considering helping Gina pay for graduate school tuition. Sophia, Wanda and Howards youngest child, was a bit of a wild child. Sophia died in a tragic motorcycle accident in her senior year of college while she was on her way home to tell her parents about a big secret she had been keeping. The summer before, Sophia had given birth to a baby girl named Grace. At the time, Sophia gave the baby to the babys father, an older married man, although no official adoption was ever transacted. Wanda and Howard still do not know about Grace. Wanda and Howard own Curl Up & Dye, a popular chain of beauty salons. Doug, Rosas husband, has worked at the business since he was a kid. Doug is now the manager and handles most of the day-to-day functions, with very little input from Wanda and Howard. Wanda and Howard would like to reward Doug for all of his hard work by giving Doug and Rosa 1/2 of the business and giving the remaining 1/2 of the business to Amy and Gina equally. They do not want Amy and Gina to have any control over the business, just to have an income interest. Rosas youngest child, Ethan, was born with a serious physical disability. To provide additional support for Ethan, Howard created an irrevocable trust with Ethan as the sole beneficiary with a $5,000,000 transfer of separate property in 2013. The trust meets the requirements of Section 2503(c).

Howard and Wanda made the following additional lifetime transfers: In 2010, Howard gave Rosa, Amy, and their spouses $200,000 each of community property. In 2014, Howard gave Rosa, Amy, and their spouses $200,000 each of his separate property. Howard paid gift tax of $347,760 on these gifts. Howard and Wanda paid $130,000 in the years 1993-1996 directly to Baylor University for Rosa to achieve a degree in Religion (assume $32,500 per year). Howard and Wanda paid $60,000 in the years 2001-2004 directly to Texas State University for Amy to achieve a degree in Finance (assume $12,000 per year). Howard and Wanda paid $32,000 in the years 2004-2007 directly to West Texas A&M University for Gina to achieve a degree in Elementary Education (assume $8,000 per year). Howard and Wanda paid $350,000 to Childrens Hospital for a lung transplant for Ethan in 2017. In 2006, Wanda gave Rosa $100,000 of her separate property as an anniversary gift. In 2014, Wanda gave each of the grandchildren of which she was aware (assume all grandchildren had been born by 2014) $100,000 of her separate property. Wanda and Howard have never elected to split gifts of separate property. Howard and Wanda estimate the following at each of their deaths: The last illness and funeral expenses are expected to be $100,000 per person. Estate administration expenses are estimated at $250,000 per person.

6. Identify and value each taxable gift made by Howard during his life. Where appropriate, explain any exemptions or exclusions that applied. 7. Calculate Howards gift tax due in each year he made a taxable gift. Show your work. Even if the tax due is zero, show your calculation in each year there is a taxable gift. 8. Identify and value each taxable gift made by Wanda during her life. Where appropriate, explain any exemptions or exclusions that applied. 9. Calculate Wandas gift tax due in each year she made a taxable gift. Show your work. Even if the tax due is zero, show your calculation in each year there is a taxable gift.